NZDUSD Close Below 0.60, Points to 0.5850 As NZ Inflation Expectations Fall

The situation looks pretty bearish for NZDUSD, especially after the failure to hold gains above 0.60 last week and the eventual close below this level. The RBNZ has shifted to dovish and the economic data from New Zealand and China is not encouraging for NZD buyers to say the least, which points to further declines ahead.

After a sharp four-cent drop in October that pushed NZD/USD below the key 0.60 level, the pair attempted a recovery last week. Although NZD/USD has been trending downward, a retracement was seen the day after the one-cent drop that followed the U.S. presidential election results.

NZD/USD Chart Daily – The 20 SMA Turned Into Resistance

This upward movement met tempered expectations, as New Zealand’s latest jobs report showed an unemployment rate increase from 4.6% to 4.8% in Q3, undermining efforts to sustain the price above 0.60. Following a dip post-election, NZD/USD rose to test the resistance around 0.6050 on the daily chart. However, sellers soon re-entered, aiming to push the price below 0.60 by Friday, with expectations of a further drop toward the 0.5850 support level.

Reserve Bank of New Zealand Inflation Expectations

• 2-Year Inflation Expectations: The 2-year inflation expectations have risen to 2.12%, up from the previous quarter’s 2.03%, reflecting a modest increase in anticipated inflation over the medium term.
• 1-Year Inflation Expectations: Current expectations for the 1-year horizon stand at 2.05%, marking a notable drop from the previous quarter’s 2.4%. This decline suggests that near-term inflation pressures may be easing.

These findings indicate a slight increase in longer-term inflation expectations while shorter-term expectations have moderated, signaling a potentially stabilizing inflation outlook in New Zealand as viewed by businesses and consumers.

NZD/USD Live Chart

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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